International links should be part of the equation, but to what extent?
Buddecomm director, Paul Budde, has long been a vocal advocate for increasing the number of international links to help drive down the cost of bringing in data from overseas and argues this should be part of any national broadband infrastructure plan.
“Yes, we get a lot of our content from overseas and we are far away from the other English speaking countries,” Budde said. “So yes these costs are high and therefore we do need more capacity. But what you also increasingly start seeing is that we start hosting or replicating some of that content in Australia as well. On one side we will always have that international link issue as that is our geographical situation but on the other side new technologies are going to assist us as well.”
Like many others, Budde says the prices paid by ISPs for international data traffic are too high (See above).
“If there is indeed enough capacity then the prices are far too high in comparison to other submarine cables,” he said. “If you bring in more competition and capacity then automatically prices should drop.”
While investing in an international link would not have much impact on the internet experience in Australia, it could be achieved in a much quicker time frame and for far cheaper than both the Liberal and Labor party plans.
For example, the Pipe Network’s PPC-1 cable launched late last year is estimated to have cost $US150 million and three years to construct.
According to the Australian-Japan Cable’s Russell, his investment was $US500 million. The Southern Cross network was roughly $US1200 million and Telstra’s Endeavour cable $US150 million. In total the investment across the four key undersea cable links sits at approximately $US2 billion.
While Budde may have solid ground in suggesting an increase in competition would decrease prices and potentially have a flow on effect to the prices we pay ISPs, Russell argues that as these cable operators are only worth 10 per cent of the ISP value chain the impact would be minimal; a 10 per cent decrease in prices at best.
On the whole, while the price for IP transit may be a point of contention, it is clear that the existing submarine cable situation in Australia and the fact internet content is based overseas should not be used to argue against building out broadband infrastructure, whatever shape that may take. However, there are arguments for more international links and it would seem prudent to include this as part of any national broadband plan.
PPC-1 launch video: